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Types of Banks
UNIT FOUR
Types of Banks
• • • •
This unit consists of four parts: Section A: Functions of a bank Section B: Types of banks Section C: Central banks Section D: Summary
By the time you have finished this unit, you should be familiar with some of the basic terms used in banking, have an idea of different types of banks, and understand the role of a central bank in a country’s economy. You will also have gone through some exercises in using the Passive Voice.
Section A FUNCTIONS OF A BANK 1. Match the words with their Hungarian translations English (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
account accumulate arrangement assets deposit duration interest invest lend loan mortgage obtain savings short-term
Hungarian A. B. C. D. E. F. G. H. I. J. K. L. M. N.
befektet betét felhalmoz időtartam, lejárati idő jelzálogkölcsön kamat kölcsön kölcsönad megállapodás megszerez megtakarítás rövid lejáratú számla vagyon
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2. Look at the words in the box. Match them with their definitions. Check whether the missing word in the definition is a verb, a noun, or an adjective. This will help you a little. A. deposit B. D. mortgage E. G. savings account H. J.
assets account accumulate Interest
C. F. I.
Short-term loan checking account
(1) If you have an ............................ with a bank, you have an arrangement to leave your money there and take some out when you need it. (2) In American English a .............................. is a personal bank account which you can take money out of at any time using your cheque book or cash card. The usual British expression is: current account or cheque account. (3) A .............................. is an account with a bank on which interest is paid. (4) A.............................. is a sum of money which is in a bank account, especially a sum which will be left there for some time. (5) ........................... is extra money that you receive if you have invested a sum of money or extra money that you pay if you have borrowed money. (6)The .............................. of a company or of a person are all the things that they own. (7) If you .............................. something to someone you lend it to them. (8) When you ......................... things or when they ........................ , you collect (gather) them, or they increase in number or amount. (9) .............................. is used to describe things that will last for a short period of time. (10) A ............................ is a loan which you obtain from a bank in order to buy a house. 3. Now read this short passage and check your answers with its help Banks perform two basic functions: 1. they offer depositors a place to keep their assets, either in a savings account, which pays interest, or in a checking account, which provides convenience, and 2. they accumulate money, which can then be loaned to individuals or businesses - these loans may be of short-term duration for family or business use, or they may be long-term, usually in the form of mortgages. 4. Write the English words or phrases against the Hungarian ones (1) csekkfüzet (2) funkciót ellát (3) kölcsönt kap (4) betétes (5) folyószámla
……………………………………… ……………………………………… ……………………………………… ……………………………………… ………………………………………
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(6) kölcsönad (7) pénzt felhalmoz (8) betétszámla (9) kényelmet nyújt (10) hosszú lejáratú
……………………………………… ……………………………………… ……………………………………… ……………………………………… ………………………………………
5. Read the passage again and translate it into Hungarian
6. Study the following list of expressions with the word account and then translate the sentences into English have an account with a bank open an account pay money into one’s account (with)draw money from/out of a bank account transfer money from one account to another a bank account is overdrawn (1) Néhány banknál nehéz bankszámlát nyitni. (2) Mr. Smith 50 fontot fizetett a bankszámlájára. (3) A folyószámlája mínuszban van. (4) Éppen pénzt vett ki a számláról, amikor a bankrablók megjelentek. (5) Folyószámlám van a Postabanknál. (6) Mr. Smith pénzt akar átutalni a lánya számlájára. (7) Számlát szeretnék nyitni a Postabanknál. 7. Find nouns that the words short-term/long-term are often used with 8. Answer the questions (1) What 2 basic functions do banks perform? (2) What is the difference between a savings account and a checking account? (3) What does a bank do with the money it accumulates? (4) What do you call the people who keep their assets with a bank? (5) What two basic types of loans does the passage about the functions of banks differentiate between? (6) What is the extra money called that you receive if you have invested some money? (7) What loan do you get from a bank in order to buy a house? (8) What can you do if you have an account with a bank and need to pay for something?
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TYPES OF BANKS 1. Match the words with their synonyms (1) primary objective (2) secured by (3) merchant (4) subscribe (5) corporate client
A. a client involved in business B. pay, contribute C. protected by D. most important aim E. trader, businessman
2. Match the English and Hungarian expressions Hungarian
English (1) is engaged in (2) with a view to (3) as contrasted with (4) a wide range of (5) on behalf of (6) securities (7) interest-bearing
A. széles körű B. megbízásából C. foglalkozik valamivel D. azzal a céllal E. szemben F. kamatozó G értékpapírok
3. Match the headings with the paragraphs A) A commercial bank B) Credit unions (US) C) Merchant banks D) A savings bank
E) The central bank F) A unit trust (UK) or a mutual fund (US) G) Building societies (UK) or thrifts (US)
Types of Banks ...................(1). All of the developed and most of the developing countries have a ........... that is the instrument of the government’s control of the monetary system. It acts as the government’s bank, controls the issue of notes, accepts deposits from and makes loans to the commercial banks and the money market. In a word, it is the bankers’ bank. .................(2) is a bank engaged in all aspects of the commerce and trade of its own country and may have business relations with other countries. The .......... operates with a view to making a profit, as contrasted with, say, a central bank whose primary objective is not to engage directly with its customers, but to supervise the
Types of Banks
monetary economy of the country. ..........s are sometimes called retail, deposit, joint-stock, or clearing banks. ..................(3) accept deposits, upon which they pay interest, and make loans for house purchases secured by mortgages. Nowadays, besides this, they offer, just like commercial banks, a wide range of services to their customers. ...................(4) (UK) also known as issuing houses or accepting houses and investment banks (US). Historically, the merchant bankers were merchants dealing in overseas trade who used their familiarity with traders to accept Bills of Exchange, and who developed other banking services connected with foreign trade, e.g. dealing in gold and foreign currency. Now they carry out a variety of financial services for the corporate client. For example, they organize the raising of capital by new issues of securities on behalf of clients, or they provide risk capital for small firms. ....................(5) is a bank which accepts interest bearing deposits of small amounts. ...................(6) is an organisation which invests funds subscribed by the public in securities, and in return issues units which it will repurchase at any time. ....................(7) are an important type of savings institutions in the United States. Most .......... are formed by people with a common bond. For example they may work for the same company or belong to the same church. When one of them needs money, he or she may borrow from the .........., often at a lower rate of interest than from another financial institution.
4. Look for the nouns that were used with the following verbs in the passage. Sometimes you have to change the structure of the expressions! (1) issue n_ _ _ _ , l_ _ _ _ and s_ _ _ _ _ _ _ _ _ (!) (2) accept (i_ _ _ _ _ _ _ - b_ _ _ _ _ _ ) d_ _ _ _ _ _ _ (3) make l_ _ _ _ (t _ ) (4) have b_ _ _ _ _ _ _ r_ _ _ _ _ _ _ _ (w_ _ _ ) (5) supervise the m_ _ _ _ _ _ _ e_ _ _ _ _ _ (6) pay i_ _ _ _ _ _ _ (o_ ) (7) develop/carry out s_ _ _ _ _ _ _ (8) raise c_ _ _ _ _ _ (b_ ) (!) (9) provide c_ _ _ _ _ _ (f_ _ )
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5. Translate the following passage into English Minden fejlett és a legtöbb fejlődő országnak van központi bankja. Ez az állam bankja és ennek van joga bankjegyeket kibocsátani. A kormány bankjaként kölcsönöket is nyújt a kereskedelmi bankoknak. A szükséges tőkét értékpapírok kibocsátásával nyeri. Elsődleges célja az ország pénzügyi gazdaságának felügyelete. A kereskedelmi bankok mindenféle kereskedelmi ügylettel foglalkoznak abból a célból, hogy haszonra tegyenek szert. Ügyfeleiknek a szolgáltatások széles skáláját nyújtják. Némely kereskedelmi banknak üzleti kapcsolataik is vannak más országokkal. A betétekre kamatot fizetnek. A takarékpénztárak kisebb értékű kamatozó betéteket fogadnak el. Az értékpapírkibocsátó bankokat az USA-ban beruházási banknak hívják. 6. Answer the following questions (1) What is a central bank the instrument of? (2) What functions does it have? (3) What is a central bank’s primary objective? (4) What about that of commercial banks? (5) In what way have building societies changed? (6) What other names are there for a merchant bank? (7) Who are the main clients for merchant banks? (8) What does this mean: “Credit unions are formed by people with a common bond”? (9) What benefits can credit unions offer to their clients? (10) How can banks raise capital?
Section C CENTRAL BANKS
1. Before you begin studying this section, write down the English words that you think will occur in connection with central banks
2. Match the words with their definitions Words A. stocks B. issue C. stockholder D. dividend E. principal
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Definitions (1) send something out, make something known (2) the capital of a company (3) a person who owns stocks and shares (4) first in rank or importance, chief, main (5) share of profits paid to shareholders in a company
3. Fill in the blanks with the following words in the passage about central banks A. regulate C. advice E. responsibility G. service I. cash
B. accounts D. government F. national H. system J. main
Central banks play a very important part in (1) .......... and international finance. They advise banks, companies, and governments and they do business with many international institutions. Usually a central bank has three (2) .......... functions: 1. Banker to the government A central bank gives the government the same (3) .......... that any bank gives to its customers, including (4) ..........on financial matters. In addition to this it has the following functions: a) It holds the central (5) .......... of the government. Any money received or paid out by the central government goes through these accounts. b) It arranges short-term borrowing for the (6) ........... . c) It manages the government’s stock. The bank issues the stocks, keeps a list of the stockholders and pays out the dividends. 2. The “Bankers Bank” The banks of a country keep a large amount of their (7) .......... in the central bank. In fact, it acts as the principal bank for all the other banks. Central banks (8) .......... the other banks in their country by making them submit reports called Statutory Reports.
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3. The issuer of bank notes It is a central bank’s (9) .......... to issue notes. The value of a bank note does not depend on gold, as earlier, but on a complicated (10) .......... of government securities.
4. Finish these sentences with the help of the passage above Central banks advise ... They do business with ... A central bank gives the government the same service ... It holds ... It arranges ... It manages ... It acts as .... It is a central bank’s responsibility ...
5. Now you will find some more information about some central banks. As you read, fill in the gaps with the words in the box and then answer the questions A. coordinate D. licences G. districts
B. responsible E. member H. short-term
C. over the years F. gold I. bankers
The Bank of England (UK): • was founded in 1694 by merchants and given a Royal Charter. (Only Sweden has an older central bank.) • has been given increasing powers (1).................... . • was nationalised in 1946. The Board of Directors is appointed by the Crown and includes industry and trade representatives as well as (2).................... . • grants (3).................... to new banks. The Federal Reserve (The Fed) (US) • In 1913 the Congress passed the Federal Reserve Act, dividing the country into (4) .................... with a Federal Reserve Bank in each. • A seven-(5) ................... Board of Governors (Federal Reserve Board) in Washington D.C. coordinates these banks, which in fact constitute a central banking system. • The Federal Reserve System is (6) .................... directly to Congress. • The Board is expected to coordinate its policies with those of the Administration and the Congress.
Types of Banks
Bank for International Settlements (BIS), Basel • was founded in 1930. • is the ‘central bank’ for international central banks. • attempts to monitor and (7) .................... worldwide monetary policy. • takes deposits ( (8) .................... and money) from central banks. • Most deposits are (9) .................... (call) deposits, but the amounts are often enormous. • All accounting is transacted in gold francs. Now answer these questions (1) Which is the oldest and the youngest of the three central banks? (2) What happened to the British central bank in 1946? (3) Who does the Board of Directors include? (4) What licences can the Bank of England grant? (5) What is the responsibility of the FED’s Board of Governors? (6) Whom is the Federal Reserve responsible to? (7) What are the responsibilities of the Bank for International Settlements in Basel?
6. The Passive Voice Passive constructions are used : • to avoid mentioning the agent, or when the agent is unknown, • to emphasize the agent with a by-phrase, (In speech the information to be emphasized is usually put at the end of a clause.) • in process descriptions, (where the action is more important than the agents) • in impersonal language. (It is widely used in formal written announcements or scientific reports where an impersonal tone is intended.)
In passive sentences we use the appropriate form of the verb to be (is/are/was/were/has been etc.) + the Past Participle of the main verb. Examples: It was built last year. The programme will be launched next year.
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7. Fill in the correct form of the verbs in parentheses (1) The Hungarian National Bank _ _ _ _ _ _ _ _ _ _ (found) in 1924. (2) The Bank of England _ _ _ _ _ _ _ _ _ _ _ _ (give) increasing powers over the years. (3) It _ _ _ _ _ _ _ _ _ _ _ _ _ _ (nationalize) in 1946. (4) The Board of Directors _ _ _ _ _ _ _ _ _ _ _ (appoint) by the Crown. (5) New banks _ _ _ _ _ _ _ _ _ _ (grant) licences by the central bank. (6) Gold and foreign exchange reserves _ _ _ _ _ _ _ (keep) in the central bank. (7) Official rates _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (publish) on Monday next week. (8) The Federal Reserve Act _ _ _ _ _ _ _ _ _ (pass) in 1913. (9) The Board of Governors _ _ _ _ _ _ _ _ _ _ _ (expect) to coordinate its policies with those of the Administration and the Congress. (10) Worldwide monetary policy _ _ _ _ _ _ _ _ _ _ _ _ _ (coordinate) by the Bank for International Settlements.
8. Change the following from the active into the passive (1) You cannot open an account with this bank after 3 o’clock. (2) They do not accept deposits of small amounts. (3) We will invest $20,000 next year. (4) The bank accumulated more than $25,000 last year. (5) They will loan most of it to individuals and businesses. (6) I overdrew my bank account last month. (7) Mr. Smith is transferring £100 to the account of his son. (8) The company has transferred £100 to my account. (9) Banks provide capital for expanding companies. (10) The bank does not pay interest on that account.
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Section D A SUMMARY 1. Before reading the following passage, match the words or phrases with their definitions Words or phrases A. charge (verb) D. overdraft G. direct debit
B. charge (noun) E. covers H. blanket J. statement
C. in the red F. clears I. standing order
Definitions (1) If a person or a company is ..................., they have spent more money than they have in their account and therefore they owe money to the bank. (2) If a sum of money .................... something, it is enough to pay for it. (3) If you have an ...................., you have spent more money than you have in you bank and so you are in debt to the bank. (4) A .................... is an amount of money that you have to pay for a service. (5) If you .................... someone an amount of money, you ask them to pay that amount for something that you have done for them. (6) When a bank ................... a cheque or when a cheque ..................., the bank agrees to pay the sum of money mentioned on it. (7) You use the word a .................... to describe something when you want to emphasize that it affects or refers to every person in a group, without any exception. (8) If you pay a bill by ...................., you give permission to the company that is owed money to transfer the correct amount from your bank account into theirs. (9) A .................... is an instruction to your bank to pay a fixed amount of money to someone at regular times. (10) A printed document showing how much money has been paid into and taken out of a bank account is called a .................... . 2. Now match the English terms from exercise 1 with their Hungarian translations (1) (bank)számlakivonat (3) kiegyenlít, kifizet (5) átutalási megbízás (állandó összegre) (7) tartozása van (9) szolgáltatási díj
(2) átutalási megbízás (állandó összegre) (4) mindenkire kiterjedő, általános (6) hiteltúllépés (8) fedez (10) felszámít
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3. Read this passage
Ripped off - by my own bank A Which? magazine survey found one in ten customers is unhappy with their bank or building society. Take the case of Elisabeth Marais. She was astounded when she found she’d been charged £20 for going just 27p into the red. Elisabeth, 70, customer at the Norwich branch of the National Westminster Bank for 40 years, ran up the overdraft after writing a £30 cheque. She thought she could cover it because her pension was due and a cheque to her building society would take a few days to clear. But it went through quickly, putting her in the red for 24 hours. When she complained, a clerk refused to reduce the fee. “She told me it was a blanket charge for any overdraft up to £100 and I had to pay,” she says. But Elisabeth pursued her complaint and, finally, NatWest waived the charge. But not all customers are so lucky. The survey revealed that one in ten customers had been charged incorrectly, one in five had problems with direct debits or standing orders, and one in seven had money wrongly removed from accounts. Midland Bank general manager Geoff Ellerton says customers overestimate the value of their money to the banks, and underestimate the cost of the service given. Current accounts involve clearing cheques, paying direct debits, providing cards, maintaining cash machines and sending out statements. This costs banks an average of £75 a year per account. The average balance of between £500 and £1000 earns the bank £35. But that isn’t any excuse for sloppy or downright bad service. 4. Choose the correct answer (1) “Ripped off” is a synonym of … . A. cheated/defrauded B. robbed
C. supported
(2) According to a newspaper survey .... not satisfied with their/his bank. A. most British citizens are B. 10 % of the customers are C. every fifth customer is (3) “Her pension was due” means that it A. arrived earlier than expected. B. was late. C. was to be paid soon. (4) “A clerk refused to reduce the fee” means he A. didn’t reduce the fee. B. agreed to reduce the fee later. C. reduced the fee immediately.
Types of Banks
(5) “Elisabeth pursued her complaint” means she A. changed her complaint. B. didn’t give up expressing her dissatisfaction with the situation. C. sued the bank. (6) “NatWest waived the charge” means the bank A. decided not to enforce the charge any longer. B. insisted on Ms. Marais paying the charge. C. doubled the charge. (7) “The survey revealed” means it A. forgot to mention that ... B. kept as a secret that ... C. made known that ... (8) “Maintaining cash machines” means A. spending millions on the development of cash machines. B. keeping them in good condition by regularly checking them and repairing them when necessary. C. buying new cash machines every year.
5. By now you should be able to answer these questions referring to Sections A, B and C (1) What two basic functions do banks perform? (2) What do you open if you want to keep your money in a bank? (3) What types of accounts do you know? (4) What is the extra money called that you pay if you borrowed some money? (5) What happens if you spend more money than you have in your account? (6) What is the primary purpose of a commercial bank? (7) What other names do you know for a commercial bank? (8) What service did merchant banks earlier specialize in? (9) Who is their main client? (10) Which type of banks specializes in securities? (11) In which country can you find credit unions? (12) What is their main attraction to clients? (13) What three functions does a central bank perform? (14) What is the difference between the Board of Directors and the Board of Governors? (15) Which country has the oldest central bank in the world? (16) Whose right is to grant licences to new banks? (17) What is the FED? (18) What institutions is the Board of Governors expected to coordinate its policies with? (19) What is the Bank for International Settlements in Basel? (20) What is its main aim?
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WORD LIST accept, -ed account accumulate, -d Administration, the ~ arrange, -d assets astound, to be ~-ed blanket charge Board of Directors Board of Governors
elfogad számla felhalmoz kormányzat (amerikai) intéz vagyon, eszközök megdöbben általános díj igazgatótanács Igazgatótanács (az angol központi banknál) branch fióküzlet, bankfiók building society (eredetileg jelzáloghitelekkel foglalkozó) takarékbank (UK) cash card készpénz-kártya cash machine bankjegy-automata charge, -d 1. felszámít, megterhel 2. szolgáltatási díj checking account (US) folyószámla cheque book csekkfüzet clear, -ed (cheques) kiegyenlít, kifizet, (csekket) bevált common bond közös érdek complain, -d panaszkodik complaint panasz convenience kényelem corporate client vállalati ügyfél cover, -ed fedez credit union hitelszövetkezet Crown, the ~ a brit állam current account (UK) folyószámla customer ügyfél defraud, -ed becsap deposit betét depositor betétes átutalási megbízás (változó direct debit összegre) dividend osztalék downright egyenesen draw, drew, drawn money from pénzt kivesz számláról an account duration lejárati idő
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enforce, -d enormous Federal Reserve Act
erőltet hatalmas törvény a Szövetségi Tartalékalapról Federal Reserve Board (US) Szövetségi Tartalékbankok Igazgatótanácsa impersonal személytelen in the red (be ~ ) tartozása van instrument eszköz interest kamat invest, -ed befektet issue, -d kibocsát issue kibocsátás license engedély loan, -ed kölcsön ad maintain, -ed fenntart manage, -d kezel merchant kereskedő monetary pénzügyi mortgage folyószámlahitel note bankjegy objective cél overdraft hiteltúllépés, folyószámlahitel overdraw, overdrew, overdrawn túllép (hitelkeretet, számlát) (an account) overestimate, -d túlbecsül pay, paid, ~ a bill kifizet egy számlát pension nyugdíj perform, -ed (a function) (funkciót) ellát primary elsődleges principal fő provide, -d convenience kényelmet nyújt purchase vétel pursue, -d folytat raise, -d capital tőkét bevon reduce, -d csökkent remove, -d töröl repair, -ed javít responsibility felelősség responsible felelős reveal, -ed feltár rip, -ped off csal, becsap risk capital kockázati tőke Royal Charter (UK) királyi alapítólevél elér run, ~,~ up
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savings savings account secure, -d sloppy standing order
megtakarítás betétszámla biztosít hanyag, felületes átutalási megbízás (állandó összegre) statement bankszámla-kivonat Statutory Report törvényileg előírt jelentés stockholder részvényes, részvénytulajdonos stocks tőke submit, -ted a report jelentést tesz/benyújt subscribe, -d jegyez substantially lényegesen supervise, -d felügyel survey felmérés transfer, -red money átutal pénzt underestimate, -d alábecsül waive, -d (the charge) eláll (követeléstől) withdraw, -drew, -drawn money pénzt kivesz
